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Friday, June 15, 2007

India’s largest share sale, to mop up Rs 9,625 crore, for DLF Ltd, a real estate developer, was at least 3.47 times subscribed, according to the data available on the National Stock Exchange website as of 9pm on Thursday.Of the 607 million bids the company got for the 175 million shares on offer, about 482 million appear to be at the higher end of the campany’s price band of Rs550 per share. The lower end of the price band was set at Rs500.DLF, promoted by billionaire Kushal Pal Singh, 74, has been attempting to raise money for almost a year, with a series of disputes with minority shareholders delaying the share sale. With this offer, the company will become India’s largest listed real estate developer and Singh and his family could be worth nearly Rs82,000 crore, at the higher price of Rs550 a share.Institutional investors such as banks, overseas buyers and mutual funds led the demand for the four-day offer, wanting to buy more than five times the shares that the company set aside for them, according to bankers involved in the transcation. DLF had earmarked the bulk of the offer, or about 104 million shares, for such investors. Retail investors, who typically wait until the last day to bid for shares, appeared to have offered to buy more or less all of the 52 million shares set aside for them.Institutional investors “have a larger appetite for the real estate sector. There are signs that the government may want to curtail investments in this sector,” said Deven Choksey, managing director of KR Choksey Securities. “So foreign investors may have to go this route. So, I think we could see more offerings coming in this sector. Retail investors feel that valuations are high so there may not be listing gains. It is hard to say what the listing price will be at this point.”DLF, which spent as much as Rs92 crore on everything from marketing to printing the forms for the offer, will soon dethrone rival Unitech Ltd as India’s top developer by market capitalization.While institutions were clamouring for DLF shares, in Gujarat, one of the most active markets for share offerings as well as grey market trading, the response to the share sale was muted among investorsNilesh Kotak, managing director of Ahmedabad brokerage firm Dhanvarsha Fincap Pvt. Ltd, said the DLF issue has not been greeted well by retail investors. Dhanvarsha’s clients made 1,000 retail applications for the Reliance Petroleum Ltd share offer, 650 for Power Finance Corp. IPO and 600 for the Idea Cellular Ltd offer. For DLF, the number of retail applications is hardly 300, Kotak said.“The other trend I have seen is that my clients have scaled down the value of applications drastically. Those planning to invest Rs1 lakh have made an application of Rs50,000. Those planning an application of Rs50,000 have made application of anywhere between Rs10,000 and Rs25,000. The retail situation is really bad,” Kotak added.Those playing koshtak, or the unrecognised grey market, made the most of the lukewarm response by retail investors. Many retail investors in the koshtak market who had earlier sold their applications for a fee on Thursday bought back their applications from brokers and made a neat profit without any investment.“On 8 June, I was offered Rs3,500 each for making four applications on behalf of my family members. The money paid per application, however, came down to Rs1,600 due to lack of interest by retail investors. The broker simply paid me Rs1,600 and we did not have to put any application,” said an investor active in koshtak market for over a decade, but did not wish to be identified because it is an illegal market.Several investors who apply for shares under the retail individual investor quota in their own name, using their own permanent account numbers (PAN), are a front for a broker who has agreed to pay them a predetermined flat fee, Rs3,500 in this case, to use the PAN card and the demat account for getting the shares. Both are mandatory for share purchases in India.The agreed fee is paid paid out irrespective of how many shares are allotted or what happens to the price of the shares once they list.In this case, the broker involved said he expects the share will not fetch a premium on its listing and hence he is cutting losses by buying back the applications.The broker normally makes profits by acquiring a significantly larger number of shares through this route than he would get on his own. He would take a hit if, for some reason, the shares list at lower than the IPO price. For DLF’s issue, the broking community is concerned that the share may fall below its listing price and so it does not want to take chances.Normally, retail applications do not get too many shares when an issue is subscribed many times over. This time, with a lukewarm response, all retail investors will be allotted the shares applied for.The premium for the DLF share in the grey market, which was ruling at Rs35 per share about a fortnight back, too, was down to a band of Rs10-12 per share. In contrast, the premium for discount retailer Vishal Retail Ltd’s Rs230-270 share was ruling at around Rs350-360 per share.

Revenue could surprise; Margin cushions being usedChannel checks and our ML CIO survey in late April, boost our confidence in robust demand of 30 to 35% revenue growth in USD terms. We believe the stronger Rupee is adding weight to negotiations for bill rate hikes. Vendors are also focusing on utilization, with recruitments passing through heightened scrutiny. Travel & G&A costs are being tightened, apart from continued efforts at offshoring and broadening of employee pyramid.

Brace for a bleak Q1; Infy annual Re EPS guidance cut likelyMeasures to protect earnings, as above, would take a few quarters to bear fruit and we believe investors need to brace for the Q1 shock of companies missing guidance by 4 to 6% and for sequential declines in profits of 3 to 9% in recurring earnings for the majors. For the first time, we believe, Infy may have to lower annual EPS guidance by 3 to 5% implying 17-20% Rupee EPS growth.

INR surge largely priced in; Top picks TCS & Infosys; Niche plays Rolta and EducompBelieve the 3-month 15% sector underperformance has largely priced in INR concerns. We expect Q1 weakeness will be priced in when we are close to July results season. Our top picks of the secular trend are leaders TCS and Infosys, where TCS has greater margin levers and is seeing broad based client traction. Top niche growth ideas are Rolta and Educomp, in our view, which stand out in our coverage as India stories insulated from forex fluctuation.

Global stocks slump as bond yields shoot upGlobal equity markets continued to be in a state of flux amid growing concerns that a booming global economy could fuel inflation, leading to a fresh round of interest rate increases. The worldwide sell-off worsened after the yield on the benchmark 10-year US Treasury note touched a five year peak of 5.303%, surpassing the Fed's target rate for overnight loans for the first time since June 28, 2006.

Sentiment nose-dived further after former Federal Reserve Chairman Alan Greenspan predicted an increase in benchmark yields and greater premiums on emerging-market debt. US Treasuries also slumped after reports in China and Japan showed rising consumer and producer prices, while the head of the UK central bank signaled that borrowing costs may need to rise to keep inflation in check. The bearish mood in the US bond market took a further knock from a mixed auction of reopened 10-year Treasury notes.

US bond yields are up sharply this month on speculation that accelerating economic growth will boost borrowing costs. Yields have retreated a bit since then, but are still up from just 4.5% three months ago. Bond yields aren't just rising in the US alone. The yield on a global basket of government bonds is at 4% - the highest level since December 2000, according to the Lehman Brothers Aggregate Global Treasury index, which tracks the performance of government bonds from 33 countries. Higher yields make bonds a more attractive investment, and if yields keep climbing, that could lure some investors away from stocks.

Fed policy makers have kept interest rates at 5.25% during their last seven meetings. And, though Wall Street and global markets have been clamouring for a reduction in borrowing costs, the Fed is unlikely to oblige them this year. On the contrary, over the past few days the chances of rate increases have gone up as the US economy regains its momentum after the recent downturn. Options on fed fund futures show traders are split on whether the Fed will lift or cut rates by year-end. Traders see a 36% chance the Fed will lift its target to at least 5.5% in December. A month ago, traders saw no chance of a rate increase by then.

DLF IPO subscribed 3.5 times; ICICI Bk issue opens on June 19

The Initial Public Offering (IPO) of DLF Ltd. was subscribed by about 3.5 times. The issue, which opened for subscription on June 11, closed on June 14. According to the NSE web site, the company received bids for 607,031,910 shares vs issue size of 175,000,000 shares. The QIB portion was subscribed more than five times and the HNI category 1.2 times, but the retail part barely managed to sail through as merchant bankers extended the deadline on the last day up to 8:30 pm. The issue comprised reservation of 1,000,000 equity shares of Rs2 each for the employees. The company priced the issue at Rs525 per share, raising Rs91.9bn (US$2.24bn). It had set a price band of Rs500 to Rs550. The IPO would constitute 10.27% of the fully diluted post-issue capital of the company. KP Singh, the main promoter, will retain a 87.4% stake in DLF post IPO. He will emerge as one of the richest persons in India after the issue is listed on the bourses some time in July. The proceeds from the issue will be invested in acquisition of land, funding existing projects and prepayment of the loans of the company. DLF will invest Rs35bn in acquisition of land and development rights, Rs34.93bn for funding existing projects and the remaining amount for prepayment of loans of the company.

ICICI Bank will hit the primary markets - both local and overseas - on June 19 with a US$5bn follow-on public issue. Half of this, around Rs100bn, will be raised in the local market and the remaining from the overseas market. The price band will be decided after both local and ADR markets close on Friday. ICICI Bank is likely to price the shares at a marginal discount to the market price. The ADR issue may be done at a slight premium to the local offer. This will be the largest-ever equity issue by an Indian company. Retail investors have been earmarked 35% of the issue or around Rs35bn, HNIs 15% while the remaining would go to institutional investors. Among foreign investors, a major chunk of nearly Rs20bn is likely to come from Temasek and GIC, in order to retain their stake. Among the domestic investors, the big subscribers are likely to be the public sector insurance companies which have a stake in the bank. Temasek, GIC, Capital International, T Rowe Price, Legatum Capital, investment arms of Dubai, Abu Dhabi, Aberdeen other than domestic institutions like LIC, SBI, UTI a host of other domestic mutual funds and public sector banks are believed to be interested in the issue.

I walk a lonely roadThe only one that I have ever knownDon't know where it goesBut it's home to me and I walk alone

The key indices may have managed to rise for a fourth week in last five weeks, but the start to the week was not at all easy, as worries of rising interest rate globally hurt the sentiments of the bulls. However, the bulls, like many of their counterparts globally, managed to overcome recent misery on the back of buying across-the-board. Compared to other major indices across the globe, the recovery in India has not been swift. Volatility has made the path rather difficult for bulls. The Indian Bulls seeming to be walking alone, unlike in the past when it moved a lot in synch with its global peers. Could it be the signs of things to come?

A sharp pull back on Thursday got some lost smile back on Dalal Street. Also, given the slowdown in inflation at home and some relief on the worries of interest-rate front globally, traders made a beeline on Dalal Street, in a way movie buffers had been queuing up outside theatres for tickets of movie 'Sivaji' starring superstar Rajnikanth. However, the bulls are facing stiff resistance at higher levels making it difficult to sustain gains. In a high volatile week, the BSE 30-share Sensex ended with 52 points or 0.37% to close at 14116 and NSE Nifty added 16 points or 0.38% to close at 4161. Index heavyweights like Tata Steel, BHEL, ACC, L&T and Hindalco advanced further providing much needed support to the bulls.

Cement stocks were in the limelight following reports that the demand for the building material will continue unabated in the monsoon season, which could lead to capacity expansion among the cement companies. ACC was the major gainer, advancing by over 6% to Rs816 during the week. Grasim, Prism and India Cements were among the other major gainers, up in the range of 1-2%.

Metal stocks led from the front following steady gains on LME. An index of six metals traded on the London Metal Exchange (LME) gained 1.9% on Thursday. Copper prices added 2.2% while nickel surged 4.9%. Tata Steel advanced by nearly 2% to Rs596 after Corus raised wire rod prices by at least 7%. Other metal stocks were also in the limelight on expectations that China's lower steel shipments in May will stabilize global prices of the commodity. SAIL advanced by nearly 9% to Rs135 and Hindalco added 2% to Rs161.

Robust economic growth boosted the capital good stocks. Production at factories, utilities and mines gained 13.6% from a year earlier. L&T was the major gainer among the 30-share Sensex. The scrip advanced by over 3% to Rs1943 after India's biggest engineering company won two orders worth Rs9.9bn from SAIL and ONGC. There were also reports that the company plans to set up a $1bn fund to invest in infrastructure projects. BHEL rose by 6% to Rs1389 and Siemens advanced by nearly 3% to Rs1305.

Rising crude oil prices and worries surrounding the interest rates have had better off the auto stocks, as they continued their slide. Tata Motors lost by 1% to Rs648, Bajaj Auto fell by 0.6% to Rs2106 and M&M lost 2% to Rs701. However, Maruti bucked the negative trend and closed higher at Rs743, up by 0.9%.

Volatility in the local currency against the Rupee again dampened the sentiments of the exporters stocks, as IT stocks continue to underperform the broader indices. TCS fell by 3.3% to Rs1181, Wipro also declined by 3% to Rs530 and Satyam Computer lost 3.08% to close the week at Rs480. However, Infosys stood out among its peers and managed to record gains of 2.5% for the week to close at Rs2001. Indian Rupee rose to 40.86 today and in the process managed to advance by 0.6%, recording its biggest gains in four weeks.

Primary market or secondary market?

With uncertainty looming large, retail investors would be better off parking money in quality offers. After market closes on Monday, you may get the price band for ICICI Bank offering. The sluggishness is likely to continue in the near term, given the lack of positive triggers available for the moment. In the near term, we may the markets consolidating at around 14 k. Action could heat up in mid-cap counters. Stay cautious as indices are facing stiff resistance at higher levels. Stronger than expected IIP data for April and FY07 could again heighten the pressure on inflation and hence interest rates in the next few weeks or months. Speculation on what the Fed would do at its meeting on June 28th, will keep global indices swinging. The effect would be felt here too. Remain stock specific. The release of advance tax numbers will keep the stock specific party going.

Inflation hits new 10-month lowIndia's inflation, based on the Wholesale Price Index (WPI), declined to 4.8% in the week ended June 2 as against the previous week's increase of 4.85%, the Government said. The drop was due to a decrease in food and energy prices. The annual point-to-point inflation rate was the lowest since the end of July last year when it stood at 4.72%. It was in line with average market expectations, and was also down from 4.88% during the corresponding week of the previous fiscal year. This will surely give a big relief to the RBI and the Government, who have been desperately trying to contain inflation, which hit a two-year peak of 6.69% in January this year. The RBI, which has raised its key interest rates nine times since Oct. 2004, will announce its next monetary policy on July 31. The central bank has surprised the markets thrice since December by announcing policy actions before its scheduled policy meetings. There is considerable pressure on rates across the world amid a booming global economy, and it won't be a surprise if the RBI too decides to pre-empt any escalation in inflationary expectations by lifting the repo rate.

April industrial output growth at 13.6% yoy

India's industrial production grew by 13.6% in April as against 9.9% in the same month last year, the Government said. The March industrial output figure was revised, from 12.9% to 14.5%. Growth in the manufacturing sector accelerated to 15.1% in the month under review from 11% in April 2006, the Government said. However, it was down from last month's revised gain of 15.9%. Mining output was at 3.4% while electricity sector expanded by 8.7%. The revised annual growth for the year ended March 2007 stands at 11.5% over the corresponding period of the pervious year. The revised annual growth in mining, manufacturing and electricity during 2006-07 is 5.3%, 12.5% and 7.2% respectively. As many as 16 of the 17 industry groups showed a positive growth during April compared to the same month last year. Growth in Basic Goods, Capital Goods and Intermediate Goods stood at 8.9%, 17.7% and 12.6%, respectively. Consumer Durables and Consumer Non-durables recorded a growth of 5.3% and 21.9% respectively, with the overall growth in Consumer Goods being 17.7%.

Govt clears transfer of RBI stake in SBI

The Government gave its approval for transferring the Reserve Bank of India's (RBI) 59.73% stake in the State Bank of India (SBI) to the Government at an estimated cost of Rs400bn by the end of this month. The Union Cabinet cleared the proposal to carry out the requisite amendments to the SBI Act, 1955 through an Ordinance to allow the stake transfer to take place by the end of this month. Cabinet spokesman Priya Ranjan Dasmunshi told reporters in New Delhi that the Government would bring a legislation in the coming monsoon session of Parliament to replace the Ordinance. The Finance Ministry is apparently pushing for an Ordinance as a bill to amend the SBI Act is pending with a Parliamentary Standing Committee. In his budget speech, Finance Minister P. Chidambaram had said that the RBI's stake in SBI would be transferred to the Centre in order to separate ownership and regulatory functions of the central bank.

Kamal Nath unveils steps to combat rupee's rise

Commerce & Industry Minister Kamal Nath announced a package of wide ranging measures to counter the negative impact of rupee appreciation on India's exports. He urged the Finance Ministry to increase the rates on DEPB and Duty Drawback schemes by 5%. He also stated that the interest rate on pre-shipment and post-shipment credit be reduced for exporters to 6%. At present, the rate of interest charged is in the region of 9% to 11%. The Commerce Ministry also wants the Exchange Earners’ Foreign Currency (EEFC) accounts to be interest bearing. It also wants banks to meet 15% export credit disbursement target. It wants the Finance Ministry to notify the Service Tax Exemption / Refunds for exports announced in the Foreign Trade Policy 2007 without further delay. All arrears of TED (Terminal Excise Duty) and CST (Central Sales Tax) reimbursement would be cleared by June 30, and the Finance Ministry will be requested to provide additional funds, if necessary. Export Credit & Guarantee Corporation (ECGC) will reduce its premia rates by up to 10% to make exports more competitive. A committee is also being set up to assess job losses due to rupee appreciation and loss of export orders, Nath said.

Foreign inflows may blunt India's competitiveness: RBI

Despite playing a key role in the rupee's sharp appreciation this year, the RBI is not comfortable with the development, as it has exacerbated the already complicated exchange rate and monetary management. The relentless inflows of foreign capital into the country could add to the overvaluation of the rupee and hurt Indian companies' global competitiveness said RBI Deputy Governor Rakesh Mohan. Given the fact that more people are in the goods sector, the human aspects of the exchange rate management should not be lost sight of, Mohan said while addressing a seminar in Paris on June 14. The deputy Governor of the RBI said the strong overseas inflows have so far been managed by building forex reserves and sterilisation, thus preventing excessive nominal appreciation and higher inflation. The big question, however remains how long and to what extent such an exchange rate management strategy would work given the fact that India is facing large and continuing capital flows apart from strengthening current receipts on account of remittances and software exports, he said.

Strike by Indian employees called off

Around 13,000 ground-staff of Indian (formerly Indian Airlines) and some cabin crew, went on a flash strike, leaving thousands of passengers across the country stranded owing to the cancellation of several flights. The adamant attitude of the striking workers forced Civil Aviation Minister Praful Patel to threaten closure of the airline. The Delhi High Court too held the strike by Indian employees as prime facie illegal and asked them to resume duty at the earliest in the interest of air travelers. However, the strike was called off following an agreement between the union of the airline's ground staff and the management on higher wages and promotion. The wage arrears of Rs2.67bn to be paid to the employees have been agreed upon. It will be paid in 18 months. "There are some minor issues on wage arrears and promotion which are amicably settled between the management, ministry and the workers," an aviation ministry spokeswoman said. "They will see how soon normalcy can be brought about."

NTPC plans FPO, says Power Secy

Public sector giant National Thermal Power Corporation Ltd. (NTPC) is planning to come out with a Follow-on Public Offering (FPO) and has sent a proposal to this effect to the Power Ministry. "NTPC may go for a FPO, I have seen the proposal," Power Secretary Anil Razdan said while announcing the second stage of NTPC's Dadri project in Uttar Pradesh. However, NTPC Chairman and Managing Director T Shankarlingam refused to confirm the public issue plan. NTPC offloaded a 10% stake through its IPO in November 2004. At the same time, the Government diluted its 10% stake in the state-run power generation company. NTPC is planning a huge capital expansion and is targeting to double its capacity to 50,000 megawatt (MW) by 2012 from 27,904 MW. The company also plans to venture into nuclear power and hydropower sectors.

Vijay Sheth gets SEBI nod for Great Offshore buy

Shares of Great Offshore Ltd. rose as much as 4.4% on Friday after the Securities and Exchange Board of India (SEBI) allowed Managing Director Vijay Sheth to buy the 18.5% stake held by cousins - Bharat Sheth and Ravi Sheth - without triggering the mandatory open offer. The development marks an end to the long-standing dispute among the Sheth brothers over the ownership of Great Offshore, which has been de-merged from the parent company Great Eastern Shipping Ltd. (GE Shipping). Vijay, who currently holds around 6% in Great Offshore, will get the majority control of the company. He will have to pay Rs5.8bn or Rs825 per share for the stake. Reports say GE Capital and IL&FS will lend around Rs5bn to Vijay for the acquisition. The deal is reportedly being managed by Mumbai-based Motilal Oswal Securities. Meanwhile, Vijay will sell his 3% stake in GE Shipping to Bharat and Ravi as part of the informal arrangement among the warring Sheth brothers.

Carborundum Universal, Strides unveil buyouts

Carborundum Universal Ltd. said it would purchase 84.14% equity stake in Volzhsky Abrasives Works located in the city of Volzhsky in the Volgograd region of Russia. Volzhsky Abrasive Works is the largest producer of Silicon Carbide (SiC) abrasives in Russia, with 65,000 tons per annum installed capacity. It also produces Bonded Abrasives and Refractories. Volzhsky Abrasive's sales in 2006 were about US$54mn. Carborundum Universal is a fully vertically integrated company with operations in Australia, Canada, China, Middle East, the US and India.

Strides Arcolab Ltd. said it would acquire Grandix Pharmaceuticals Ltd. and its subsidiary Grandix Laboratories Ltd. on a cash and debt free basis for Rs1bn (about US$24mn). The transaction is EPS accretive and offers a platform to grow a domestic strategy by infusing a robust pipeline, Strides said in a statement. Grandix is a branded pharma company mainly focused on South India. For FY06, Grandix posted sales of Rs485mn (US$11.8mn) and EBITDA of Rs108.9mn (US$2.6mn). Sales in 2007 is expected to grow at over 30%.

Time Technoplast soars on debut

Shares of Time Technoplast Ltd., the maker of technology based polymer products, jumped as much as 58% on listing on June 13. The stock opened at Rs415.55 as against the issue price of Rs315, translating into a premium of 32%. The scrip closed the week at Rs473 after touching a peak of Rs516.70. Time Technoplast had come out with an IPO of 39,21,500 equity shares of Rs10 each. The issue was subscribed 49.55 times. The price band for the issue was fixed at Rs290 and Rs315 per share. The issue constituted 18.74% of the fully diluted post-issue paid-up capital of the company. Time Technoplast plans to use the IPO proceeds for domestic projects and funding its subsidiaries overseas which include Elan Inc. in Sharjah, UAE. It also plans a production facility in Poland under its subsidiary Novo Tech SPZoo for auto components and lifestyle products.

Chinese Premier hints at further tightening

With the latest batch of economic reports not revealing any moderation in economic growth, Chinese Premier Wen Jiabao said his government will need to boost interest rates to prevent the world's fourth largest economy from overheating. "Monetary policy needs moderate tightening," Wen said. He didn't say when the next monetary tightening move will come, nor did he specify the nature of the action. However, economists feel some sort of monetary tightening is on the cards in the next few days. It could be in the form of another interest rate hike or an increase in the reserve ratio requirement for the lenders. The People's Bank of China has raised interest rates twice this year and ordered banks five times to set aside more money as reserves. It has been four weeks since the central bank raised rates and the reserve ratios, besides widening the trading band for the yuan. "China still faces prominent problems in the economy, including rapid growth in industrial production and the trade surplus, fast investment growth, excessive liquidity, increasing inflationary pressure and energy conservation challenges," Wen s

Japan's economic growth revised up

Buoyed by increased spending by companies, the Japanese economy grew at a much faster pace than what the government had initially anticipated in the first quarter. The performance of the Japanese economy was much better than both the United States and the euro zone, stoking fears that the Bank of Japan (BOJ) will hike interest rates later this year. The world's second-largest economy grew at an annual 3.3% rate in the three months ended March 31, the Cabinet Office said. The reading was faster than the 2.4% preliminary estimate. The revision was in line with the median estimate. The economy expanded by 0.8% in January-March from the previous quarter, revised up from an initial reading of 0.6%, on robust growth in capital spending. The government expects Japan to achieve economic growth of 2% in the fiscal year ending March 2008.

BOJ keeps key rate unchanged

The Bank of Japan (BOJ) kept interest rates unchanged for a fifth consecutive meeting as it seeks more evidence that the world's second largest economy is in a better shape after several years of stagnation. Central Bank Governor Toshihiko Fukui and his colleagues held the key overnight lending rate at 0.5%, the BOJ said today. The decision was unanimous and widely in line with market expectations. Financial markets expect a rate hike by September. Many economists reckon the BOJ will raise its overnight call rate target to 0.75% at its August 22-23 meeting, after an upper house election in July and GDP growth figures for the April-June quarter. The yen fell to a 4 1/2-year low against the dollar and approached a record low against the euro after the BOJ Governor said he will raise the overnight lending rate only gradually. The Japanese currency is heading for its biggest weekly drop since January against the dollar.

IEA ups forecast for global oil demandThe International Energy Agency (IEA) raised its forecast for global oil demand this year, based on the new data received from Nigeria, Indonesia and other oil producing countries. Global fuel demand is expected to rise 2% to 86.1mn barrels in 2007 from a revised 84.5mn barrels in 2006, the Paris-based IEA said. That's 420,000 barrels per day (bpd) more than what IEA projected in May. World demand is estimated to have grown by 0.9% in 2006 or by 250,000 bpd to 84.5mn barrels. "It's difficult to escape the conclusion that the oil market will be tight in the second half of the year," the IEA said in its monthly report. The increase in the IEA's demand forecast reflects revisions to 2005 data and higher-than-expected demand in countries including Nigeria, Indonesia, Singapore, Venezuela and former Yugoslavia. Meanwhile, oil cartel OPEC kept its 2007 world oil demand growth forecast broadly unchanged in this month's report and brushed aside calls from consuming countries that it should increase supply in a bid to lower oil prices.

China not a currency manipulator: USNotwithstanding the unrelenting pressure from the US Congress, Treasury Secretary Henry Paulson refused to accuse China of currency manipulation but said that the yuan was undervalued. "China is allowing its currency, the yuan, to rise at a pace that is much too slow and should be quickened," the Bush Administration said in it's semi-annual report on currency policies. Separately, the US trade representative Susan Schwab rejected a petition by 42 House members who wanted the Bush administration to bring a trade case against China before the World Trade Organization (WTO) over the currency issue. It was the third time that Washington has rejected such a request. US lawmakers were not impressed with the Bush administration's handling of the issue. In fact, four US senators introduced legislation that would allow US companies to seek steeper anti-dumping duties to counter the threat from manipulative currency practices by China or any other country.

Nymex may sell itself out: report

Nymex Holdings, the parent company of the New York Mercantile Exchange, has reportedly approached larger rival bourses to sell itself out. The world's leading market for energy futures contracts has held talks with NYSE Euronext, Deutsche Boerse and Chicago Mercantile Exchange Holdings, Bloomberg News reported citing two people close to the matter. Top Nymex executives met their counterparts at the three exchanges, and its Board has been informed of the talks. Unlike many of its rivals, Nymex doesn't have its own electronic trading platform. Instead, key contracts such as the WTI oil futures contract trade electronically on a Chicago Mercantile platform called Globex. Meanwhile, the Tokyo Stock Exchange (TSE), the world's second-biggest equities market, said that it had acquired a 4.99% stake in Singapore Exchange (SGX) to enhance alliances between the bourses. The exchange is considering developing the alliance further, it said. The largest Japanese exchange said that it had informed SGX of the purchase after the end of Friday's trading in the Singapore market.

India's largest real estate development company(1), has received an overwhelming response to its 100% book built Initial Public Offering (IPO). The IPO, the largest to date, garnered demand of nearly Rs. 30,000 crores (approx. US$ 7.4 bn).The IPO comprised 175 million shares, out of which 1 million shares were reserved for Employees ("Employee Reservation") resulting in a Net Issue of 174 million shares. 60% of the Net Issue was offered to Qualified Institutional Buyers (QIBs), 10% was offered to Non Institutional investors (including High Networth Individuals) and 30% was offered to Retail Investors.The offering was launched with a price band of Rs. 500 to Rs. 550 per share. The issue was subscribed approximately 2.75 times at the top end of the price band (Rs. 550 per share). At Rs. 550 per share, the QIB portion was subscribed 3.94 times. The retail portion was 0.96 times subscribed and the non – institutional was subscribed 1.08 times. The offering received nearly 590,000 bids.The company could have comfortably priced the issue at the top end of the price band. However, the company chose to price the IPO at Rs. 525 per share as a gesture of their appreciation to the tremendous response and keeping in mind the long-term relationship with investors. At the issue price, the offering size is Rs. 9, 187.5 Crores (approximately US$ 2.25 billion).The offering received overwhelming participation from across the globe. Nearly 90% of institutional demand came from global institutional investors with almost equal contribution from US, Europe & Asia. Majority of the demand was from long-only funds.

Commenting on the success of the IPO, Mr. K.P. Singh, Chairman, DLF Limited said, "We greatly appreciate this overwhelming response from both the domestic and global investor community and thank them for the confidence reposed in DLF. We welcome the large number of shareholders to the DLF family and we will do our very best to meet their expectations".Mr. Rajiv Singh, Vice Chairman, DLF Limited said, "This IPO will help us in accelerating our growth and maintaining our leadership position in India's real estate sector thereby enhancing shareholder value".The Global Coordinators to the issue were Kotak Investment Banking and DSP Merrill Lynch. Lehman Brothers was the Senior Book Running Lead Manager to the issue. The Book Running Lead Manager to the issue were Citi, Deutsche, ICICI Securities Primary Dealership and UBS. SBI Capital was the Co-Book Running Lead Manger to the issue

This week was really a case of mice trying to bell the cat. The US market was as unpredictable as ever and the Indian Markets opened gap up and gap down depending on the US markets close. There was no mind of its own, though internal factors did come into play during the day. All said and done the takeaway this week is that the US economy is less shaky than it was appearing to be.

This week marked the beginning of the largest Indian IPO ever and this from DLF. Interestingly it is already around 4 times oversubscribed. Another one from ICICI is round the corner and that is for Rs 20,000 crore. This fear had had the markets down. Now that we face the issue, markets have digested this so really impact is not there to be felt.

Markets are headed into June which is the 2Q reporting season. Newsflow has not been encouraging. Rains have been delayed because of the Middle east storm Gonu. However, as per reports this should help the monsoons to be well spread and normal even despite the delay as pacific oceans will be cooled. Inflation numbers came in at 4.8% and that was some more relief. The big news which was positive was IIP. The April Index for Industrial production grew by 13.6% against an expectation of about 11%. This growth was led by manufacturing which grew by 15%. This has brought in fears that the RBI will be tough and will hike CRR. . Important to note that these numbers are for April. The last CRR hike of 50 basis point was implemented by the end of April and the effect of that is still to take effect into the IIP figures. Slower growth in Auto for May is where its been seen already and also in Housing,

The tech sector saw a smart bounce earlier in the week taking the cue from some sudden weakness in the Rupee. But this strength could not be sustained and was met with some profit taking. Later part of the week saw strength in Cement. However that too did not sustain.

Sensex closed up about 98 points for the week. Among the major gainers there was ACC +6%, Bhel +5%, HPCL +4%. The tech stocks were the losers though losses were less than 4%.

The tech sector was weak this week on profit taking post the run up seen last week. Wipro, Satyam , TCS were losers this week. Investors suddenly have got kicked up about the tech sector last week. We mentioned in our previous notes. DSP also is wondering whether its time to buy.. By the time she decides.. may be it will be time to sell. In our view, it would be unwise to be bullish about this sector yet. There is strong optimism and the feeling of deja vu may be felt for few days. But really, we are unwilling to bite yet. The sector remains in an overweight in most portfolios. The business traction remains good. However, the pressure on salaries is tough and we think that the rates for the projects will not increase with the same pace and the growth numbers in the bottomline are likely to not surprise in any big way.

Crew B O S was a note we covered this week. The company's performance was good and the company did well with its fashion assessories. However, the stock was weakish. Near term performance will not be exciting as the company is consolidating its manufacturing facilities.

We had a note on Balkrishna Tyres. This company is focused on Off the Road tyres.. the Earth Moving Equipment tyres, Agricultural Implement tyres etc. The company is expanding its capacities to meet the global demand. Here is a company which is globally competitive. It as over 3% of the global capacity and growing well. We are bullish on this one. Do read our note on this one.

Technically Speaking: Sensex took resistance at 14280 and slipped back. A close over this level would have given a big trigger to the markets and brought in the buyers. As of now the cat is still in the bag and jury is not out. Its not that markets have turned bearish but they have not turned bullish. A close below 14000 will decisively be indicated to be negative. A close above 14300 would be deemed bullish.

Fundamentally speaking: The demand conditions are a bit soft. The interest rate environment is biting and there are worries of a further CRR hike. We dont think this will happen.. rather we advocate that this should not happen. Inflation is lesser of a problem now and growth has slowed. The conditions are getting ready for easing. However till as much time things get clearer, markets will continue to look for direction. All eyes will be westward .. waiting for cues from how the US close each day as has been the case this week.

The market resumed with a huge positive gap of 74 points on firming trends in global markets, expectations of a further ease in inflation and smart gains in yesterday's trades. The market remained firm but within a range of 14250-14300 in the early trades. The stocks rallied sharply in the afternoon session as India’s inflation rate slipped to 4.8% in the week ended June 2 and touched the intra-day high of 14327. The Sensex shed some gains thereafter but recovered on some buying interest for a while. The Sensex slipped further as selling intensified in frontline, information technology (IT) and metal stocks dragging the index down to enter into negative territory and touch the day's low of 14113. After slipping over 200 points from the day's high the Sensex ended the session by shedding 41 points at 14163. The Nifty closed the session by adding a point at 4171.

Although the market fell sharply, the breadth of the market was positive. Of the 2,571 stocks traded on the BSE 1,275 stocks advanced, 1,210 stocks declined and 86 stocks ended unchanged. Among the sectoral indices the BSE IT Index, the BSE Metal Index and the BSE Oil & Gas Index lost around 1% each while the BSE CG Index gained 1.68% and the BSE CD Index added 1.18%.

The market is expected to stay sideways, in absence any major trigger in the near term. The focus may shift to the primary market due to ICICI Bank's large issue which opens for subscription on 19 June 2007.

ICICI Bank, the country’s largest private sector bank said on Thursday, 14 June 2007, it is raising up to Rs 20,000 crore ($4.9 billion) through a follow on public offer in India and US. The funds mobilised through these offerings will be used to expand its international and rural operations, and meet the growing demand for loans.

The issue will open on Tuesday, 19 June 2007, in both the countries and will remain on for a period of four days. The price band will be announced on 17 June 2007. The bank would issue equity shares worth Rs 8750 crore in the domestic market. A similar amount would be raised through American Depository Shares (ADS) listed on the New York Stock Exchange, where the bank is already listed. The fund raising also includes a green shoe option of Rs 2625 crore.

Also the progress of monsoon will be watched closely. The next trigger is expected to come from June 2007 quarter results. Stock specefic buying is expected to continue.

There are some supportive factors for the market. The inflation has declined recently and it now hoveres below 5%.

The domestic bourses closely track movement in global markets. So any sharp correction in global equities may trigger sell-off here as well.

The market edged higher last week amid volatile trade on alternate bouts of buying and selling. Concerns of rising domestic and global interest rates weighed on the sentiment. Caution was also partly due to large IPO pipeline. While the IPO of reality major DFL was over last week, another large issue which is from ICICI Bank is set to open for subscription early next week.

The 30-share BSE Sensex rose 98.90 points or 0.7% to settle at 14162.71 in the week ended Friday, 15 June 2007 from its close of 14063.81 on 8 June 2007. The S&P CNX Nifty rose 26.45 points or 0.63% to settle at 4171.45 in the week ended 15 June 2007 from its close of 4145 on 8 June 2007.

The BSE Small-Cap index rose 7.66 points or 0.1% to settle at 7350.25 in the week ended 15 June 2007 from its close of 7342.59 on 8 June 2007. BSE Mid-Cap index rose 24.70 points or 0.4% to settle at 6180.92 in the week ended 15 June 2007 from its close of 6156.22 on 8 June 2007.

The barometer index BSE Sensex rose 20 points on Monday, 11 June 2007, snapping four days losing streak. Prior to Monday’s rise, Sensex had plunged 507 points in just four trading sessions, to 14,063.81 on 8 June 2007 from 14,570.75 on 1 June 2007.

The market ended with modest gains on Tuesday, 12 June 2007, amid high degree of volatility. Sensex rose 48 points on the back of gains in oil & gas, metal and cement shares. The barometer index regained 14000 level after it had dipped below the psychologically important level in intra-day trade.

The market edged lower on Wednesday, 13 June 2007, tracking weak global markets as investors grappled with a seemingly relentless rise in US bond yields. The 30-share BSE Sensex lost 128 points at 14,003.03.

Firm global markets aided a rebound on Thursday, 14 June 2007, as Sensex jumped 201 points. Stocks rose across the globe as US bond yields eased and US economic data came in stronger than expected.

Sensex lost 41 points in volatile trade on Friday, 15 June 2007. The fall in domestic bourses was in contrast to the firmness in global equities. The US treasury market continued to show signs of stabilising, helping Asian and European equities extend their gains. Rising US bond yields had weighed on global markets earlier this week.

IT stocks attracted buying at declines on a view that the rally which took the rupee to nine-year high against the dollar in May 2007, has lost momentum. IT stocks had retreated over the past few weeks hit by rupee’s surge. A rise in rupee impacts IT firms as they derive a lion’s share of revenue from exports to US.

The IPO of reality major DFL was subscribed over 3 times, with substantial bidding from foreign institutional investors.

Cement shares recovered after data from Cement Manufacturers' Association showed that cement sales rose 10.6% to 14.21 million tonnes in May 2007. ACC was the top draw among cement scrips after its shipments rose 19% in May 2007.

Reliance Industries (RIL) witnessed alternate bouts of buying and selling. As epr reports, RIL will firm up a gas-pricing formula for its Krishna Godavari (KG) basin by July 2007. It also plans to produce crude oil from the KG block in 2008. The production will initially start at 30,000-40,000 barrels per day and peak at about 50,000 bpd.

Copper and aluminium maker Hindalco Industries extended gains on continued market speculation that Alcan may team up with Sterlite Industries to bid for Hindalco. The rumour has lifted the scrip sharply since the beginning of this month.

Time Technoplast ended at Rs 480.35 on BSE on 13 June 2007, a premium of 52.49% over IPO price of Rs 315. The IPO hasd Time Technoplast IPO ended on 23 May 2007, with 49.45 times subscription.

Haryana Capfin settled at Rs 100.80 on Monday, 11 June 2007. The listing of the Jindal group company was following a restructuring scheme at Jindal Drilling & Industries (JDIL). The Casinvest division of JDIL was demerged and vested into Haryana Capfin (HCL) as a going concern

ICICI Bank said on Thursday, 14 June 2007, it would launch a share sale next week to fund robust demand for loans in the rapidly expanding economy. It will offer shares worth Rs 8750 crore ($2.1 billion) each in India and in the United States, with a greenshoe option for 15%, taking the total offering to Rs 20125 crore

The private sector bank will fix an indicated price band for the domestic follow-on offer on Monday, 18 June 2007. The issue will open for subscription on 19 June 2007 and close on 22 June 2007.

The union cabinet on Friday, 15 June 2007, approved passing of an ordinance that would pave the way for government acquiring RBI's 59.7% stake in State Bank of India (SBI). The ordinance route was taken as the State Bank of India (SBI) Amendment Bill, which allows the government to take control of the RBI's 59.7% stake in SBI is still pending in Parliament.

On Monday, 11 June 2007, BSE announced shift of a total of 35 scrips to trade-to-trade segment to be effective from Friday, 15 June 2007. The stocks transferred to trade-to-trade segment include Andrew Yule & Company, Dawn Mills, Kernex Microsystems (India), Parekh Platinum, TVS Electronics and Alphageo (India), among others.

Reliance Capital Asset Management filed initial papers with Securities & Exchange Board of India (Sebi) to launch an exchange-traded fund (ETF) that will track CNX Bank Index. Reliance Banking Exchange Traded Fund would invest at least 90% of its assets in securities that make up underlying index and in the same proportion as the index.

The market regulator Securities & Exchange Board of India (Sebi) constituted a panel to suggest suitable measures to address issues relating to difficulties faced by investors while dealing with transmissions of securities in physical and dematerialised mode. The panel will examine various procedures followed by listed companies and registrar and share transfer agents for transmission of physical shares.

On Tuesday, 12 June 2007, Finance Minister P Chidambaram said the government did not want to reduce overall demand but favoured moderating the expansion in some sectors. The intention is not to constrain demand in every sector. The intention is to curb demand in sectors in which overheating exists, like real estate and housing.

The wholesale price index-based inflation rose 4.8% in the 12 months to the week ended 2 June 2007, lower than the previous week's increase of 4.85%, due to a decline in food and energy prices, data released by the government today, 15 June 2007, showed.

The annual inflation rate was the lowest since end-July last year when it stood at 4.72%. The annual inflation rate was 4.88% during the corresponding week of the previous year.

According to the latest data of Index of Industrial Production (IIP), industrial output was up 13.6% in April 2007 compared with 9.9% in April 2006. Manufacturing output climbed up 15.1% in April 2007 against 11% in April 2006. Industrial output of March 2007 has been revised and stands at 14.5%.

The strong industrial production data triggered concerns that further monetary tightening by RBI may be on cards, belying expectation that the interest-rate cycle had peaked

Union Commerce and Industry Minister Kamal Nath said on Wednesday, 13 June 2007, the government is confident of meeting its 2007/08 export target of $160 billion despite the rise in the rupee this year. The rupee has risen more than 8% against the dollar this calendar year, so far, to be Asia's best performing currency.

There was a trend reversal in the market which were trading firm till mid-afternoon trade, as selling emerged at higher level. The late fall in domestic bourses was in contrast to the firmness in global equities. Shares from metal and IT sectors dragged the market lower, while buying was seen in capital goods and consumer durables stocks. State Bank of India (SBI), Reliance Industries (RIL) and NTPC were the key losers, which were responsible for the fall today.

The 30-share BSE Sensex lost 41.01 points or 0.29% at 14,162.71. It had opened on a firm note at 14,277.61 and advanced to a high of 14,326.55 shortly, tracking strong global markets. The index slipped to a low of 14,112.53 at the fag end of the trading session.

However, the S&P CNX Nifty ended slightly higher. It rose 1.45 points or 0.03% at 4171.45. The Nifty June 2007 futures were at 4,129, a sharp discount of 42.45 points over spot closing of 4,171.45

The market lost ground even as the latest data showed that the growth in inflation was the lowest since end-July last year when it stood at 4.72%. The wholesale price index rose 4.80% in the 12 months to 2 June 2007, lower than the previous week's increase of 4.85%, due to a decline in food and energy prices, government data showed.

European markets were also trading higher. FTSE 100 (up 0.55% to 6,686.20), MIBTel (up 0.32% to 33,359) and CAC 40 (up 0.38% to 6,069.91) edged higher. The US treasury market continued to show signs of stabilising, helping Asian and European equities extend their gains. Rising US bond yields had weighed on global markets earlier this week.

The market breadth, indicating the overall health of the market, was positive on BSE as buying continued for small-cap and mid-cap stocks for the second straight day. However it was not as strong as it was in morning session: 1,302 shares advanced as compared with 1273 that declined, while 93 remained unchanged.

Among the Sensex pack, 18 declined while the rest advanced.

State-run engineering major Bhel jumped 2.65% to Rs 1385 on 1.44 lakh shares, and was the top gainer among Sensex constituents. On Wednesday, 13 June 2007, Bhel bagged a Rs 430-crore order from Indian Oil Corporation (IOC) to supply steam generators for IOC's Vadodara project.

L&T (up 0.82% to Rs 1938.80), Suzlon Energy (up % to Rs ), BEML (up % to Rs ), and Bharat Bijlee (up % to Rs ) advanced from the capital goods pack. As the result, the BSE Capital Goods Index rose 1.68% at 11,156.78, and was the top gainer among sectoral indices on BSE.

State Bank of India (SBI) lost 0.40% to Rs 1,308.80. It had surged to a high of Rs 1348.50 in intra-day trade. The government is all set to acquire Reserve Bank of India's (RBI) stake in State Bank of India, with the union cabinet today, 15 June 2007, approving passing of an ordinance to the effect. The ordinance route was taken as the State Bank of India (SBI) Amendment Bill, which allows the government to take control of the RBI's 59.7% stake in SBI is still pending in Parliament.

Hindalco Industries slipped 1.86% to Rs 161. Credit rating agency CRISIL, on Thursday, 14 June 2007, downgraded its rating on Hindalco by one notch from triple-A to double-A. Crisil had placed under rating watch with negative implications, following a large debt raised by the company to funds its acquisition of Novelis.

ICICI Bank rose 0.47% to Rs 910 after the country’s largest private sector bank said on Thursday, 14 June 2007, it is raising up to Rs 20,000 crore ($4.9 billion) through a follow on public offer in India and US. The funds mobilised through these offerings will be used to expand its international and rural operations, and meet the growing demand for loans.

This issue will open on Tuesday, 19 June 2007 in both the countries and will remain open for a period of four days. The price band will be announced on 17 June 2007. The bank would issue equity shares worth Rs 8,750 crore in the domestic market. A similar amount would be raised through American Depository Shares (ADS) listed on the New York Stock Exchange, where the bank is already listed. The fund raising also includes a green shoe option of Rs 2,625 crore.

Index heavyweight Reliance Industries (RIL) lost 1.54% to Rs 1,670, on 7.57 lakh shares. It eased from high of Rs 1710. RIL will firm up a gas-pricing formula for its Krishna Godavari (KG) basin by July 2007. It also plans to produce crude oil from the KG block in 2008. The production will initially start at 30,000-40,000 barrels per day and peak at about 50,000 bpd.

IT stocks edged lower. The BSE IT Index lost 0.75% at 5,062.86, and was the top loser among the sectoral indices on BSE. Infosys (down 1% to Rs 2000.10), Wipro (down 0.40% to Rs 530), TCS (down 1.89% to Rs 1181) and Satyam Computers (down 2.01% to Rs 480.75) declined.

The rupee today slipped against the US currency and was quoted near 41-level in late morning deals due to fairly good import coverings amid slowdown in FII inflows into equity markets.

Hindustan Dorr-Oliver jumped 5% to Rs 87.25 on bagging a Rs 85-crore order from Indian Oil Corporation for the recycling plant of IOC for its Haldia refinery, which is the biggest recycling plant using reverse osmosis technology in any refinery in India. The project is to be commissioned within 18 months.

SpiceJet rose 0.53% to Rs 57.80 on reports Jet Airways is eyeing the stake of the Kansagra family promoted Royal Holding Services and Gulf based investment house Istithmar PJSC, which hold around 13% each in SpiceJet. Reports also said the commonality of fleet and easy integration with Air Sahara are the key reasons behind Jet looking at SpiceJet.

Astra Microwave Products rose 1.21% to Rs 145.80 after a block deal was struck for 3.51 lakh shares at Rs 145 each in opening trade on BSE, constituting 0.65% of the equity capital of the company.

Venus Remedies moved up 2.43% to Rs 474 on successfully filing for patent in 48 countries around the globe for its research product.

Ruchi Soya Industries lost 1.80% to Rs 384. It announced 5-for-1 stock split during market hours today, 15 June 2007.

Indiabulls Real Estate jumped 3.29% to Rs 370.05 on joining hands with Zublin International for large infrastructure projects. They have also agreed to set up a special purpose vehicle (SPV) to execute these projects.

Ashapura Minechem gained 1.11% to Rs 337 the company announced during market hours today, 15 June 2007, that its board would consider bonus issue in a board meeting on 27 June 2007.

Elecon Engineering Company gained 2.90% to Rs 509 on declaring a liberal 2:1 bonus issue. The scrip touched a high of Rs 527.85 and a low of Rs 490.10 during the day. Besides the bonus issue, the board of Elecon Engineering Company also recommended during trading hours today, 15 June 2007, 75% dividend.

The Bank of Japan (BoJ) left its assessment of the economy unchanged in a monthly report on Friday, 15 June 2007. The central bank's Policy Board also kept interest rates unchanged at 0.5% at a meeting that ended on Friday, 15 June 2007. The central bank maintained its outlook that the economy will continue expanding moderately.

Wall Street surged again yesterday, 14 June 2007, launching the Dow Jones industrial average to its best two-day advance since last July after data showed that wholesale inflation, excluding energy and food costs, is rising at a gentle pace. The Dow Jones rose 71.37 points, or 0.53%, to 13,553.72. Broader stock indicators also rose Thursday. The Standard & Poor's 500 index advanced 7.30 points, or 0.48%, to 1,522.97, and the Nasdaq composite index climbed 17.10 points, or 0.66%, to 2,599.41.

Crude oil traded near a nine-month high in New York after a drop in US refining raised concern that fuel supplies may remain below average. Crude oil for July delivery was at $67.64 a barrel, down 3 cents in electronic trading on the New York Mercantile Exchange.

There are two ways to slide easily through life; to believe everything or to doubt everything. Both ways save us from thinking.

The bulls, like many of their counterparts globally, managed to overcome recent misery. The Sensex cracked a double-ton with broad-based rally. Small-cap and mid-cap shares joined the party. Market breadth was positive and turnover was better as well. Things are looking up this morning, with a rally across global markets. Among the immediate concerns, is the selling by FIIs and higher crude oil prices. Though the world equity markets have recovered in the last two days, the fear of further hike in interest rates will continue to weigh on the sentiment.

Meanwhile, the Bank of Japan (BOJ) today kept interest rates unchanged for a fifth consecutive meeting as it awaits more evidence on the economy's strength after consumer prices fell for a third month. Governor Toshihiko Fukui and his colleagues held the key overnight lending rate at 0.5%, the BOJ said. The decision was unanimous and widely in line with market expectations.

Some high profile and self-made investment gurus are warning of a bubble across all the asset classes, including emerging markets like India. Whether the bubble bursts or not only time will tell. But, it pays to be on guard for any unforeseen events that could have a ripple effect across the global markets. Today, we expect a firm opening on the back of the global strength. As usual, the profit booking at higher levels cannot be ruled out.

ANG Auto has approved the plan to set up a wholly owned subsidiary in Hong Kong / Singapore. Hind Rectifiers has announced a dividend of 100% and has also proposed a stock split from Rs10 per share to Rs2. Container Corporation of India has recommended a Final Dividend @ 220% (inclusive of Interim Dividend @ 110% already paid) for the financial year 2006-07. Elecon Engineering's Board will meet today consider and approve a proposal for declaration of bonus shares. Nicholas Piramal could gain amid reports that it may hive off its R&D business and sell stake to private equity players.

US stocks rallied on Thursday for the second session in a row, spurred by a benign inflation report and stability in the bond market. Energy shares rallied to a record on the back of a surge in crude oil prices.

Exxon Mobil, GM and Intel led the Dow Jones Industrial Average to its best two-day jump since July after oil climbed to a nine-month high. AT&T sent telecom shares to the second-biggest increase in the Standard & Poor's 500 Index on prospects that it will boost the number of wireless subscribers.

The S&P 500 Index added 7.3 points, or 0.5%, to 1522.97. in New York. The Dow increased 71.38 points, or 0.5%, to 13,553.73. The Nasdaq Composite Index advanced 17.10 points, or 0.7%, to 2599.41.

US light crude oil for July delivery climbed $1.39 to settle at $67.65 a barrel on the New York Mercantile Exchange. Gold prices added $3.20 to settle at $655.90 an ounce. Treasury prices held steady following the tame PPI reading, moving slightly lower in afternoon trade, putting the yield on the benchmark 10-year note at 5.22%, up slightly from late on Wednesday. In currency trading, the dollar hit a four-and-a-half-year high against the yen and edged higher versus the euro.

European shares registered the biggest one-day advance since mid-March. The pan-European Dow Jones Stoxx 600 index climbed 1.6% to 394.29. The UK's FTSE 100 rose 1.4% to 6,649.90, while the German DAX Xetra 30 rose 2.2% to 7,849.16 and the French CAC-40 advanced 1.9% to 6,047.23.

In the emerging markets, the Ibovespa in Brazil rose 1.4% to 53,712 while the IPC index in Mexico advanced 0.7% to 32,114 and the RTS index in Russia surged 3.5% to 1870.

Asian stocks rose for a second day, led by BHP Billiton and Sumitomo Metal Mining, after prices of copper, nickel and crude oil climbed.

The Morgan Stanley Capital International Asia-Pacific Index advanced 0.4% to 151.25 as of 10:42 a.m. in Tokyo, heading for a 0.5% gain this week. Indexes across the region rose, except in China.

In Japan, the Nikkei 225 Stock Average added 0.6% to 17,944.65, while the broader Topix index climbed 0.5%. Canon led exporters higher after the yen fell to the lowest in more than four years against the dollar, boosting the value of their US sales.

An index of six metals traded on the London Metal Exchange (LME) gained 1.9% yesterday. Copper prices added 2.2% while nickel surged 4.9%.

Bulls came back strongly as firm cues from International markets lifted the key indices at open. Further markets gained momentum as buying in the frontline stocks like SBI, Infosys, Reliance Industries, ABB, ACC, L&T and BHEL. The BSE Metal and the Capital Good index led the way. Even the Mid-Cap and the small cap indexes gained over 1.5% each. Finally, the 30-share Sensex surged 200 points to close at 14203. NSE-50 Nifty added 56 points to close at 4170.

ICICI Bank edged lower by 0.8% to Rs905. The company announced that they would raise Rs87.5bn selling shares and to reserve 5% stock for existing shareholders. The scrip touched intra-day high of Rs925 and a low of Rs901 and recorded volumes of over 9,00,000 shares on NSE.

Lupin advanced by 1.3% to Rs682 after the company announced that the US FDA has granted Final approval for the Company's Abbreviated New Drug Application (ANDA) for Trandolapril Tablets. The scrip touched intra-day high of Rs687 and a low of Rs678 and recorded volumes of over 1,00,000 shares on NSE.

ICRA rallied by over 13% to Rs907 after the company said it has signed MoU with Corporation Bank under which the Company will assign ratings to Small Scale Industries (SSIs) and Small and Medium Enterprises (SMEs) that are borrowers of the above bank. The scrip touched intra-day high of Rs922 and a low of Rs806 and recorded volumes of over 26,00,000 shares on NSE.

GBN advanced by 2.5% to Rs908 after the company announced that they would launch 24 hours Marathi Language News & Current Affairs Channel. The scrip touched intra-day high of Rs914 and a low of Rs890 and recorded volumes of over 1,00,000 shares on NSE.

OCL India gained by 1.4% to Rs138 after the company announced its plans to sell securities to select investors for Rs2.2bn. The scrip touched intra-day high of Rs139 and a low of Rs137 and recorded volumes of over 16,000 shares on NSE.

Metal stock shinned brightly led by gains in the index heavy weight Tata Steel, the scrip was up by over 3% to Rs615, SAIL spurred by over 3.5% to Rs133, Hindalco gained by 2.2% to Rs164 and Sterlite Industries added 1% to Rs540.

Technology stocks also were on the move. Frontline stock Wipro was up by 0.4% to Rs532, Infosys gained by 1.5% to Rs2019 and Satyam Computer added 1% to Rs491. I-Flex surged by 5% to Rs2486 and Rolta added 1% to Rs422.

Pharma stocks recorded healthy gains. Dr Reddy’s Lab advanced by 1.9% to Rs639, Ranbaxy was up by 1.8% to Rs370, Wockhardt Pharma gained 0.8% to Rs410 following reports that it may buy US drugmaker, Morton Groove and Divi’s Lab added 0.8%to Rs5324.

The market is expected to continue its uptrend today after a 201 points surge in the Sensex on Thursday, 14 June 2007.

The government will release the rate of growth of wholesale price index-based inflation in the 12 months to the week ended 2 June 2007 today, 15 June 2007. The wholesale price index-based inflation rate had dipped to 4.85% for the week ended 26 May 2007, the lowest in eight months, as food items and some manufactured products became cheaper.

The central bank is targeting to keep inflation within 4%-4.5% in the mid-term and under 5% in fiscal 2007-08.

Wall Street surged again yesterday, 14 June 2007, launching the Dow Jones industrial average to its best two-day advance since last July after data showed that wholesale inflation, excluding energy and food costs, is rising at a gentle pace. The Dow Jones rose 71.37 points, or 0.53%, to 13,553.72. Broader stock indicators also rose Thursday. The Standard & Poor's 500 index advanced 7.30 points, or 0.48%, to 1,522.97, and the Nasdaq composite index climbed 17.10 points, or 0.66%, to 2,599.41.

As per the provisional data, FIIs were net buyers to the tune of Rs 34.13 crore in equities, while domestic institutional investors (DIIs) bought shares worth a net Rs 32.57 crore on Thursday, 14 June 2007.

The market is likely to display a positive trend on the back of increasing investor confidence on economic outlook and positive global cues. Strong investor's appetite for heavyweights and sectoral stocks could see the market to extend its winning streak. However, caution should be maintained as higher bouts of intra-day volatility is likely to persist. Among the local indices, the Nifty could test higher levels in the 4190-4220 range and has a support at 4140. The Sensex on the downside may slip to14000 and may face resistance at 14300.

Major US indices rose Thursday for the second session in a row, as a mild reading on inflation and stabilization in the Treasury market helped investors set aside recent worries about rising interest rates. While the Dow Jones flared up by 71 points at 13553, the Nasdaq moved up by 17 points to close at 2599.

Except Rediff all the Indian ADRs traded firm on the US bourses. Patni Computer led the pack with gains of over 3% while, HDFC Bank, Dr Reddy's, Tata Motors, MTNL, Infosys, Satyam, Wipro and VSNL closed with the gains of 1-2% each.

The Nymex light crude oil for July delivery gained by 1.39% to close at $66.26 a barrel. In the commodity space, the Comex gold for August delivery jumped $3.20 to settle at $655.90 an ounce.

US stocks rallied for the second consecutive day today, Thursday, 14 June, 2007. Investors were thrilled when bond yields did not rise much even as producer price index for May went up beyond expectation. Stocks ended higher in spite of crude settling at $67.65/bbl though this gave Exxon Mobil shares a good boost.

Total PPI rose a larger than expected 0.9% in May boosted by a big 4.1% increase in energy costs. But the core rate (excluding food and energy) rose 0.2%. The yield on the 10-year note today closed slightly higher at 5.21%

Twenty-four out of the 30 Dow stocks closed higher for the day. The Dow Jones Industrial Average closed higher by 71.38 points at 13553.73. Nasdaq rose 17.1 points to close at 2599.41 and S&P 500 went up by 7.3 points to close at 1522.97.

GM, Caterpillar and Exxon Mobil were the major Dow winners today. Du-Pont, Wal-Mart, AIG and Merck remained the four Dow laggards.

With today’s gain, Dow is up 258 points over two days, its biggest such advance since last July. But it is still about 120 points below the record close it hit on 4 June, 2007.

GM gains 4.7% on news of “deal” with United Auto Workers

When market opened in the morning, bond yields coming off their highs helped equities gain some traction. The indices extended their reach to the upside as the strength across the board in Technology acted as a source of notable support. A 3.5% advance in Intel shares gave semiconductors a lift. Financials sector also provided some influential leadership.

GM shares gained gained 4.7%. It was reported that Delphi and former parent GM are "very close" to reaching a deal with the United Auto Workers that would provide a cash payout to Delphi workers in exchange for lower hourly wages.

Bonds earlier advanced, sending yields lower, as yields in Europe seemed to stabilize in the wake of tame eurozone consumer prices. PPI rising a bigger-than-expected 0.9% in May failed to lift yields further. After trading higher earlier, the bond finished down 4/32 at 94 16/32, while its yield, which moves inversely, rose to 5.216%.

Of the eight sectors attracting buyers and providing a floor of support today, Energy paced the way.

Traders to focus on tomorrow’s CPI report

Crude oil futures rose today at their highest levels since September 2006 and gasoline futures finished near a two-week high. Violence in the oil-rich Middle East, particularly with Hamas fighters reportedly seizing control of almost all of the Gaza Strip, contributed to oil's rally. Yesterday’s weekly inventory report also contributed to some extent.

Crude-oil futures for light sweet crude for July delivery closed at $67.65/barrel (higher by $1.39/barrel or 2.1%) on the New York Mercantile Exchange. July reformulated gasoline gained 6.94 cents (3.2%) to close at $2.2247 a gallon. Natural gas for July delivery soared 20 cents (2.6%) to $7.808 per million British thermal units.

Trading volumes showed 1.4 billion shares trading on the New York Stock Exchange and 1.9 billion trading on the Nasdaq stock market. Advancing issues topped decliners by 21 to 11 on the NYSE and by 17 to 11 on the Nasdaq.

Tomorrow, traders will focus on the CPI report, given its influence on the market's outlook for the economy. Other than that, before market opens will be the NY Empire State Index, Q1 Current Account Deficit and Industrial Production. A preliminary read on sentiment, compiled by the University of Michigan, will be released at 10:00 ET.